Penalty notices must specify the exact limb of section 271(1)(c), or the proceedings become invalid.

Penalty notices under section 271(1)(c) must specify whether the charge is concealment of income or furnishing inaccurate particulars of income, because the assessee must know the exact allegation to mount an effective defence. Where the show-cause notice is vague and does not identify the relevant limb, the defect goes to the root of the proceedings and the penalty is invalid and unsustainable.

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Issues: Whether penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 were vitiated because the show-cause notices did not specify the particular limb of the charge.

Analysis: The notices issued under section 271(1)(c) read with section 274 did not identify whether the proposed penalty was for concealment of income or for furnishing inaccurate particulars of income. In penalty matters, the assessee must be informed of the exact charge so that an effective defence can be raised. Where the initiating notices are vague on this foundational aspect, the defect goes to the root of the proceedings.

Conclusion: The penalty proceedings were held to be invalid and unsustainable for want of specification of the relevant limb in the show-cause notices.

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